Tools/ Dividends
Dividend Reinvestment Calculator
A reinvestment plan takes each dividend and buys more shares automatically, fractional shares included, so the next dividend lands on a larger holding. This calculator runs that chain forward year by year on your own yield, growth, and horizon, next to the same position taking its dividends as cash. No sign-up, and the calculation runs entirely in your browser on the numbers you type.
Value with reinvestment, year 5
$6,207.11
124.1423 shares, grown from 100.0000 by reinvesting $1,207.11 of dividends. Taking the same dividends as cash instead ends at $6,105.13 ( $5,000.00 of stock plus $1,105.13 collected). The reinvestment edge in this projection is $101.99, and it is a projection of your assumptions, not a forecast.
| Year | Dividend / share | Dividend received | Shares bought | Shares at year end | Value |
|---|---|---|---|---|---|
| 1 | $2.00 | $200.00 | 4.0000 | 104.0000 | $5,200.00 |
| 2 | $2.10 | $218.40 | 4.3680 | 108.3680 | $5,418.40 |
| 3 | $2.21 | $238.95 | 4.7790 | 113.1470 | $5,657.35 |
| 4 | $2.32 | $261.96 | 5.2393 | 118.3863 | $5,919.32 |
| 5 | $2.43 | $287.80 | 5.7560 | 124.1423 | $6,207.11 |
Pre-filled with the worked example from this page ($5,000 at $50.00, a $2.00 dividend growing 5% a year, price held flat) so the mechanics are visible before you type. Educational tool, not financial advice. A projection runs your assumptions forward; it does not predict any company's dividend or price.
How it works
Each year, the model pays the dividend on the shares held at the start of the year, buys more shares at that year's price, fractional shares included, then grows the dividend per share at your assumed dividend growth rate and the price at your assumed price growth rate. Your next dividend is therefore calculated on a larger share count, and if the dividend itself also grows, the two growth sources multiply.
The comparison column is the discipline: the same starting shares, the same growing dividend, taken as cash. The gap between the two endings is the pure reinvestment effect under your assumptions, with no market heroics hidden inside it. Set the price growth rate to zero and the gap is reinvestment alone, which is exactly how the worked example below is built.
A worked example
Start with $5,000 at a flat $50 share price: 100 shares. The dividend starts at $2.00 per share, a 4.0% yield on the $50 price, and grows 5% a year. The price is held flat on purpose, so the table isolates reinvestment and dividend growth alone:
| Year | Dividend / share | Dividend received | Shares bought | Shares at year end | Value |
|---|---|---|---|---|---|
| 1 | $2.00 | $200.00 | 4.0000 | 104.0000 | $5,200.00 |
| 2 | $2.10 | $218.40 | 4.3680 | 108.3680 | $5,418.40 |
| 3 | $2.21 | $238.95 | 4.7790 | 113.1470 | $5,657.35 |
| 4 | $2.32 | $261.96 | 5.2393 | 118.3863 | $5,919.32 |
| 5 | $2.43 | $287.80 | 5.7560 | 124.1423 | $6,207.11 |
Taking the dividends as cash instead collects $1,105.13 across the five years and ends at $6,105.13 combined, against $6,207.11 reinvested. Five years shows the mechanism honestly and modestly. The same mechanism over twenty or thirty years, on a rising dividend, is where reinvestment earns its reputation, and also where the output starts depending heavily on the assumptions you choose.
Check any row by hand: year 3's dividend is 108.3680 shares times $2.205, which is $238.95, and that buys 4.7790 more shares at $50. Trusting the shape of this short table is what makes the longer projections believable.
Where a DRIP projection misleads
- The growth assumption does half the work.In the worked example, dividend growth contributed as much as reinvestment did. A projection fed an aggressive growth rate produces an aggressive future; ground the rate in the company's own history.
- Real prices do not sit still. Flat was a teaching device. A falling price makes each dividend buy more shares; a rising price makes it buy fewer. Run the price growth rate both ways before quoting an ending value.
- Tax still applies in taxable accounts. A reinvested dividend is generally taxed in the year paid, as if you had received the cash, even though no cash passed through your hands.
- Every reinvestment is a tax lot. Five years of quarterly dividends on one holding is twenty lots; a decade across a portfolio is hundreds. When you eventually sell, cost basis depends on those records being right.
Frequently asked questions
How much faster does a portfolio grow with DRIP?
There is no universal multiple. In this page's flat-price worked example, five years of reinvestment produced $6,207.11 against $6,105.13 for taking the cash, an edge of about $102 that comes entirely from dividends paid on reinvested shares. The edge compounds with time, dividend growth, and any price appreciation on the growing share count, and it shrinks if the cash alternative was itself invested elsewhere at a good return.
Are reinvested dividends taxed?
Generally yes in a taxable account, in the year the dividend is paid, as though you had taken the cash, because you directed the payment rather than never receiving it. Tax-advantaged accounts follow their own rules. This is general information about how reinvestment is commonly treated, not tax advice; confirm your treatment against current IRS guidance or a tax professional.
What dividend growth rate should I assume?
One grounded in the company's own history and current payout, stated as an assumption. The worked example uses 5 percent for roundness. Feeding a calculator the highest growth rate a company ever posted, sustained forever, manufactures a future the company never promised. Run a slower case as well and treat the pair as a range.
Does this calculator buy fractional shares?
Yes, like broker reinvestment plans do. A $218.40 dividend at a $50 share price buys 4.368 shares, not 4 shares with cash left over. The fractional treatment is what puts the whole dividend back to work, and it is why every reinvestment also creates a new small tax lot to track.
How does reinvestment change yield on cost?
Quietly and substantially. In the worked example, by year 5 the annual dividend has grown to $287.80, paid on every share held at the start of that year, reinvested shares included. Against the original $5,000 cost, that income is a yield on cost of about 5.8 percent, up from 4.0 percent at purchase. Each reinvestment is also a new lot at that day's price, so a long-running plan's true blended yield on cost needs lot-level records.
Watch your real snowball, not a projection
Inside FullPort, your actual reinvested dividends, lots, and yield on cost are tracked holding by holding, so the projection you ran here can be checked against what your portfolio really did.
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The companion lens on the same position is the yield on cost calculator, which shows what the growing stream pays on the capital you originally committed, and the paired explainer, Dividend Reinvestment Calculator: How DRIP Turns Income Into More Shares, walks through the mechanics, taxes, and record-keeping end to end.